Thinkific (TSX:THNC) Files to List on the TSX

Posted on April 14, 2021 by Mathieu Litalien

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APRIL 22 - UPDATE: Thinkifc prices its IPO at the high end of expectations. The company will issue 12,310,000 shares at a price of $13.00 per share for total gross proceeds of $160M. Investors will have the option to buy an additional $1.85M shares as part of the over allotment option. 

In our last update, we incorrectly calculated the value of the company because it left out the Multiple voting shares. Combined, the company will have 26,439,268 Subordinate Voting Shares outstanding and 56,993,752 Multiple Voting Shares. In total, there would be 83,433,000 shares outstanding on a fully diluted basis assuming the overallotment is exercised. See Final prospectus for more details. 

At $13 per share, that gives Thinkific a market cap of $1.08B and a P/S ratio of 28 based on USD annual revenue run rate (forward looking) of $30.7M. This is well above DCBO and Coursera which recently listed on the NYSE. 

While it is encouraging that Thinkific priced at the high end of expectations (first IPO in a while) it certainly looks pricey here. Granted, if it can grow at a triple digit pace again in 2021, than forward revenue would be closer to USD$42M which would drop its valuation to 20.57 times forward sales - much more respectable. It drops even lower if it can match the 150% growth it achieved in 2020.

For Thinkific, it will be all about hitting lofty growth expectations to justify these valuations. The company is expected to close and begin trading on the TSX under the symbol "THNK" next Tuesday, April 27. 

APRIL 14 - Thinkific expects to raise $160M at prices between $11-$13 per share and issue between  12,307,692 and 14,545,454 shares. At the mid range and assuming it the overallotment is exercised, it will have 27,635,273 fully diluted shares outstanding. This gives it a market cap of ~$332M and based on forward annual recurring revenue a P/S ratio of 10.8 which is slightly below where DCBO is currently trading (12.63 forward revenue). 

Coursera (COUR) on the NYSE opened pretty strong in early April but has since cooled. It is currently trading at 22.35 times sales. Since it is too early for estimates yet, if we assume the company can match last year's 60% growth rate, then Coursera is trading at around 14 times forward sales. 

I'll be interesting to see if Thinkific can garner support as many of the recent IPOs have priced below expectations. 

MARCH 23 - The pace of IPOs is starting to pick up and Thinkific is the latest technology company looking to cash in on a hot IPO market. No pricing details have been released yet, but it expects to trade under the symbol "THNC". 

Thinkific is a learning platform that enables businesses to build, market and sell courses and other learning products. As of end of December, it had 25,000 customers and in 2020, more than 66M courses were taken by 21M students. 

Last year, US$276M in gross merchandise volume passed through its platform and it generated $21.1M in revenue and exited the year with $30.7M in annual recurring revenue (ARR) - a 150% increase over where it was at the end of 2019. 

Since launching in 2015, the company has an ARR compound annual growth rate (CAGR) of approximately 160% - a pretty impressive pace of growth.